Colony said to join venture for rental-home loans

Tom Barrack’s Colony Capital LLC is teaming with two other single-family rental-home landlords to offer as much as $1 billion in loans to similar operators this year, said three people with knowledge of the agreement.

Colony’s partner in the venture is San Francisco-based Dwell Finance LLC, said the people, who asked not to be named because the deal is private. The loans of as much as $100 million, and for as much as 70 percent of the value of the properties, will last as long as five years, according to the website for Dwell. The lender was formed by Gregor Watson and Rob Bloemker, founders of two single-family rental companies with almost 4,000 homes between them.

“We’re targeting well over $1 billion in loans in 2014” with financing from an “institutional partner,” Watson, founder of San Francisco-based 643 Capital Management, said in a telephone interview. He wouldn’t name the partner. “We spent the last two years developing the systems and the processes and the underwriting and now we feel comfortable that we can really scale that business.”

Single-family home landlords, who invested more than $20 billion to buy as many as 200,000 homes in the past two years, have turned to financing smaller operators as housing prices recover and the industry shifts from acquiring to managing properties.

Santa Monica, Calif.-based Colony, which owns more than 15,000 rental houses through its Colony American Homes Inc. unit; Blackstone Group LP, the largest single-family landlord, with more than $8 billion invested in 43,000 homes; and Cerberus Capital Management LP all started lending operations last year to extend credit to smaller operators.